In June 2023, a thought provoking paper on the PAYGO business model and its evolution towards “PAYGO 2.0” co authored by USAID’s Power Africa and William Nolens of Paygo lab was published. The PAYGO 2.0, is a model that places the customer at the center of operations. This new model will transform off-grid energy providers’ approach to customer service, emphasizing proactive care, and deeper customer engagement combined with stronger credit practices to attain higher portfolio quality.
The PAYGO sector has seen significant changes in investment over the last decade. While the sector experienced substantial investment growth in the early 2010s, recent trends show a more cautious approach from investors especially for PAYGO 1.0 companies that haven’t yet adapted to credit-risk best practices. In 2023 GOGLA reported a 43% drop in investments compared to 2022. As risk management improves and companies align with PAYGO 2.0 by putting the customer first, we expect a shift toward more strategic investments focused on portfolio quality rather than sheer growth.
In this context, Upya is committed to helping the renewable energy sector transition from PAYGO 1.0 to PAYGO 2.0 by providing innovative solutions that enable greater access to affordable and reliable energy for all.
Understanding PAYGO 2.0: From Quantity to Quality
PAYGO 1.0 companies have traditionally focused on revenue growth, prioritizing fast deployment which was often at the cost of customer well-being. This has led to issues such as over-financing customers, high default rates, and low customer satisfaction due to below par after sales service.
In contrast, PAYGO 2.0 shifts the focus towards a high quality sustainable business model which seeks to prioritize customer affordability, ultimately leading to healthy growth. By enhancing customer screening, providing proactive support, and embedding a culture of customer care across the organization, PAYGO 2.0 companies aim to ensure that profitable growth is both sustainable and inclusive.
As distributors transition to PAYGO 2.0, developing sophisticated credit risk models becomes paramount. Upya’s CRM platform empowers distributors to seamlessly integrate their customers’ credit risk models, enabling more accurate and tailored risk assessments. Moreover, this enhanced risk management capability is crucial for optimizing customer acquisition and minimizing defaults. On Upya, credit risk assessments are available both online and offline, ensuring providers can manage risk even in areas with limited connectivity. This flexibility is critical for businesses operating in remote or low-connectivity areas to ensure creditworthiness can occur at all times. By doing so, embedding these models into our CRM, distributors can continuously refine their assessments, ensuring that they keep portfolio risk under control.
Beyond allowing for credit model based risk assessment , Upya’s CRM offers a suite of tools designed to support distributors’ PAYGO 2.0 journey. These include:
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Precise Inventory Management for After-Sales Service
Upya’s inventory management tool ensures clients have real-time control over their deployment and their after-sales needs. Specifically, this feature tracks warranty coverage, manages products and spare parts, and supports troubleshooting and repairs. Efficient after-sales service is vital for keeping customers satisfied, especially when products are under warranty.
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Robust Ticketing and Automation System
Upya’s robust ticketing system streamlines customer support by centralizing inquiries and ensuring prompt treatment. Furthermore, the automation module can improve efficiencies further. This combined approach ensures faster response times, personalized service, and a superior customer experience. Agents and their supervisors can manually track and prioritize complex queries while automated features handle routine tasks, optimizing efficiency and aligning with PAYGO 2.0’s emphasis on proactive, personalized customer care.
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Flexible Commission Models
Upya’s commission module allows distributors to align agents’ financial incentives with long-term payment completion and portfolio health. In thhis structure incentivizes agents to focus on customer retention and payment completion, rewarding their commitment to ensuring customers stay on track and reducing default rates.
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Efficient reporting to investors
With the availability to easily track the portfolio-at-risk (PAR) and repayment performance, Upya ensures distributors can monitor and report on collections and portfolio quality, providing their investors with valuable insights on their operations.
By offering these tools, Upya empowers its distributors to successfully transition and deliver on the promise of PAYGO 2.0, ensuring seamless service delivery, long-term customer satisfaction and loyalty, operational efficiency, and ultimately business sustainability.
